Shares purchased on Jan 31 can’t be sold on Budget day; Feb 1 no-business day for MFs

This is on account of tomorrow being a settlement holiday as depositories are closed even as markets are open

Kumar Shankar Roy Jan 31, 2020

small and mid cap stocksIn light of the live trading session being held on February 1, 2020 (Saturday) on account of presentation of Union Budget 2020-21, settlements for trade dates January 31 and February 1 will be made on February 4, 2020, brokers have said.

Markets will remain open for the Equity and F&O (derivatives) and Commodities segments on Saturday.

Trading will be conducted during normal hours – 9 AM to 3:30 PM – on February 1, 2020.

“Shares purchased on Friday, January 31, cannot be sold on Saturday, February 1, which is Budget Day. Mark-to-market and premium debits or credits received on January 31 will not be adjusted against the margin/premium for fresh position(s) taken on February 1. Ensure you have sufficient margins in order to avoid any violation,” brokerage Sharekhan said.

When trading stocks in India, equity settlement happens on T+2 days. ‘T’ meaning the trade day or day you traded.

But why can’t shares purchased on Friday be sold tomorrow? The reason is tomorrow being a settlement holiday. A settlement holiday is a day when the markets are open, but the depositories (NSDL, CDSL) are closed.

Samco Securities also told investors that settlement in Equity Segment for the trade date 31/01/2020 and 01/02/2020 will commence on 04/02/2020. “You are requested to avoid BTST between these two consecutive sessions to avoid short delivery/auction,” Samco informed.

Buy Today, Sell Tomorrow or BTST in trading is a trading facility wherein traders can sell the shares before delivery (or before the shares are credited in the demat account).

“There will be no change in the delivery settlement calendar for contracts expiring on January 31, 2020. There will be no change in the staggered delivery period for Gold and Gold Mini contracts expiring on February 5, 2020. Client margin reporting for trade date February 1, 2020 shall fall due on February 7, 2020,” said Multi Commodity Exchange Clearing Corporation.

Do note that CDS (currency) trading will remain closed on Budget day.

No business day for MFs

AMFI has announced that mutual funds schemes will remain closed on Saturday. This means MFs will not declare NAV for February 1.

Any purchase done on Saturday, February 1, will be at the February 3rd NAV, which is the next business day for mutual funds.

Kumar Shankar Roy

Kumar Shankar Roy is contributing editor with RupeeIQ. Kumar is a financial journalist, with a functional experience of 15 years. He tracks mutual funds, insurance, pension, PMS, fixed income/debt and alternative investments markets closely. He has worked for The Times of India, The Hindu Business Line, Deccan Chronicle Group, DNA, and Value Research, among others, across different cities in India. He is deeply interested in marrying data insights with actionable opinion. He can be contacted at [email protected].

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